While they provide a useful overview of Canadian inequality, the economists reveal a striking lack of interest in its causes. That in itself tells us something about the attitudes of the business class.
The title of the report expresses the business attitude toward the issue: The Case for Leaning Against Income Inequality in Canada. It's an argument, not an ironclad assertion, and at best it suggests only "leaning" against inequality. Presumably a comparable case could be made for leaning toward inequality until the proles are totally demoralized.
They are uninterested in the personal and social impact of inequality, but Alexander and Fong do worry about "how inequality can act as an obstacle to economic success. Rising inequality can hinder investment in human capital and curtail productivity. It can also reduce social mobility, which can create a negative cycle by further reinforcing and entrenching the upward trend in inequality."
This is not a shocker to anyone born since 1950. Inequality began to intensify in the U.S. in the mid-1970s -- shortly after then-president Richard Nixon effectively ended the postwar economic order by letting the dollar float, while the Saudis and other oil-producing nations imposed the "oil shock," raising prices from $3 to $12 a barrel. In today's dollars, that quadrupled the price overnight from $15.50 to $62.
End of the golden age
Those decisions ended a two-decade golden age when North American workers could afford to buy their own homes, send their kids to college, and look forward to a comfortable retirement -- all on one worker's steadily growing income.
With the rise of Margaret Thatcher in Britain and Ronald Reagan in the U.S., that began to change. Alexander and Fong note that "From 1976 to 1998, real (after-inflation) average family income only increased by 1.3 per cent." And that was only because average families couldn't manage on Dad's income any more. Mum had to go out and get a job too, usually one much less well-paid than his.
We left the golden age already convinced that education was the answer to any economic problem. Faced with the Soviet threat, our politicians agreed, and poured money into colleges and universities. Young people swarmed into post-secondary even as their mothers were swarming into the low-wage job market, and the effects were similar: with so many new female workers, employers could keep wages low, and with so many new graduates, a BA or even an MA wasn't as valuable as it had been in the 1950s.
More economic shocks have followed: the recession of the early 1980s drove mortgage rates above 20 per cent, providing B.C.'s Socreds with the pretext to slash the incomes of teachers, police and other unionized workers. According to then-premier Bill Bennett, those weren't "real" jobs.
By then, the corporate world was already reframing the political debate. Think-tanks like the Fraser Institute cranked out plausible press releases on the evils of taxes and unions. Ronald Reagan was calling government the problem, not the solution (as if the Second World War had been won despite government and not thanks to it). Margaret Thatcher was asserting that there is no such thing as "society" -- we were now in a Hobbesian war of all against all, and he who died with the most consumer goods would be the winner.
Alexander and Fong point out the impact of "globalization," which means free trade, and that in turn means it's cheaper to build stuff in China and ship it here in container ships than to build it in Windsor or Burnaby. Families that were mysteriously short of cash could at least buy cheap stuff in Walmart and pretend to be as well off as their parents had been. Running up their credit made it even easier.
Nothing personal, just business
Paul Martin was finance minister when his boss Jean Chrétien brought in free trade, and Martin then hacked the deficit by impoverishing millions of his fellow Canadians. Nothing personal; it was just business, which was now powerfully energized by the fall of the Soviets. With no alternatives, free trade was the only game in town. If workers didn't like it, too bad. Besides, private-sector unions had dwindled and public-sector unions were clinging by their fingertips.
In hindsight, we can see the Chrétien-Martin feud as a quarrel among the masters that only allowed a nastier master to take power. The Liberals had been indeed liberal when Trudeau took over in 1968, but liberalism then was just the cost of doing business at the end of the golden age. By the time he left in 1984, Trudeau was yesterday's man and the business of Canada was business.
What's more, it was the cheapest business possible, the business that required the least possible investment in people and technology. Canadian manufacturing began to fade; companies like Electrohome no longer made TVs and record players.
Now we were hewers of wood and drawers of water again, deforesting the country and exporting water in the form of raw logs, wheat, beef and other agricultural produce.
So we have ended up, as Alexander and Fong point out, relying on natural resources. And they admit those resources haven't done all Canadians much good: "It is important to highlight that the level of income for the average earner in the bottom 20 per cent of the income distribution was only $15,500 in 2011."
The bubble-fuelled economy
The TD economists note that at least we're not as badly off as the Americans: "In America, there has truly been a hollowing-out of middle skill jobs. The impact of globalization and technological change on Canadian middle skill jobs has been more muted due to the strength of the commodity sector and the construction/real estate sector, both of which employ many middle-income workers. Nevertheless, the number of jobs in non-commodity tradable production industry (i.e. traditional manufacturing) has suffered badly."
So our present prosperity depends on pumping bitumen and natural gas to fuel foreign economies. Then those economies can sell us cheap food and manufactured goods because we can't afford anything better. From the money we pay them, they'll invest in Vancouver condos, driving housing prices far beyond the reach of middle-income Canadians.
If the price of oil keeps falling, of course, or governments get serious about climate change, the Canadian housing bubble will burst; then we'll see a real income gap.
Alexander and Fong say very little about how we got into this mess. Nor do they mention the public health impact of widening gaps in income and wealth, which was already well understood in the 1970s.
But it does seem clear that the great corporations in the U.S. and Canada had always resented their governments' efforts to end the Great Depression. Government spending was OK in a war or cold war, if it meant big contracts, but the corporations knew they could make even more money if only they could escape regulation and the demands of unions.
As Donald Gutstein has documented in his recent book Harperism, the rise of the corporate-funded think-tanks was a key event. The Fraser Institute was just a branch plant in a major new industry: manufacturing anti-government thought. Conservative economists found work in such think-tanks, or in sympathetic universities, and they began to reframe the whole debate.
By the time Ronald Reagan doddered into retirement, unions were hamstrung, and the voters found themselves transformed into "taxpayers" whose "hard-earned" dollars must be left in their own pockets for private spending rather than pooled for the public good. With the convenient fall of the Soviet Union, and China's new credo that "to get rich is glorious," savage capitalism began to transfer wealth to the wealthiest.
We are now at the point where the New Democratic Party, which once proudly called itself socialist, tries to build its appeal around subsidized day care -- which would not be such a necessity if Canadian families didn't require at least two wage-earners to make ends meet. If the sacred free market decrees that global millionaires can buy condos in Vancouver at impossible prices, the Canadian workers who build the condos will have to find cheaper housing out in Abbotsford.
The TD economists really don't find anything to object in this state of affairs, except to warn the one per cent that its own huge cut of the action may get a bit smaller -- that decent jobs and incomes are just a cost of doing business, not a reasonable social and political goal.
But we know that income inequality has terrible consequences for public health. And Thomas Piketty has warned that it must eventually lead to violent social upheavals and war. Surely Alexander and Fong are aware of these consequences; yet they choose to ignore them. Until the economists of the business class are ready to speak truth to the power that pays them, Canadian income inequality will continue to worsen.
Original Article
Source: thetyee.ca/
Author: Crawford Kilian
No comments:
Post a Comment